Y Combinator says Monzo’s community will help it succeed in the US where others have failed

Leading US startup backer Y Combinator has become the latest high-profile backer of Monzo, on the eve of the bank’s American expansion.

Today Monzo confirmed it had raised £113m in a round led by Y Combinator’s Continuity fund, along with Latitude, General Catalyst, Stripe,Passion Capital and others.

Head of Marketing Tristan Thomas told AltFi that the business is now very well-capitalized given its last £85m funding round was only in October, and said the new round isn’t purely linked to US expansion.

“I think it's much better to be in a position where you're not raising investment right before you really need it, and instead be able to work with a partner like Y Combinator and get that expertise earlier rather than later,” said Thomas.

Monzo also confirmed it’s now adding 200,000 new customers every month.

With regards to the US, Anu Hariharan, partner at Y Combinator Continuity, told AltFi that she believes Monzo is well-positioned to succeed where others have failed for two reasons.

“Firstly, it's one thing for the old banking system to spin off a new mobile app and say this is mobile banking, versus building something ground up like what Monzo has done with a full tech stack which makes it really easy to become the operating centre of finance,” she said, pointing to features like Monzo’s recently-launched home utility switching service.

“And the second thing which I haven't seen anyone else have is the community. They built ground-up by having in-person town halls and a community of users who are advocates of Monzo everywhere.”

Monzo’s monthly active customers currently sit at around 1.6m, with 40,000 of those actively participating in their online community forum.

“I believe that there will be multiple digital banks that scale very well, but in the US we don't have a Monzo yet, there is no digital bank that has gained as much traction. But it's only a matter of time.”

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